Singapore state-owned fund Temasek, one of the world’s largest investors, reported a sharp drop in returns and warned it would be “cautious” about new investment amid a deteriorating economic outlook.
Temasek said on Monday that downturns in China and the technology sector in particular had weighed down on its performance, with shareholder returns standing at just 5.8 per cent in the 12 months to March, far below the 24.5 per cent recorded for the previous year.
The results underline how a sudden reversal in markets has set back investors who had enjoyed years of rapid growth. Over the past decade, the value of Temasek’s portfolio has more than doubled to S$403bn ($287bn) largely thanks to its big bets on China and tech.
“Against these global uncertainties, our investment approach remains cautious,” said Lim Ming Pey, managing director of Temasek’s strategy office, highlighting the impact of the war in Ukraine, slowing economic growth and rising inflation.
“In view of the current environment, we expect to slow down our investment pace this financial year,” Lim said.
Temasek said the total value of its investments in the technology, media and telecoms industry had dropped from 14 per cent to 7 per cent of its total portfolio.
Temasek’s investments in China, which previously made up the biggest chunk of its portfolio, also took a hit, with the value of its investments in the country decreasing from 27 per cent to 22 per cent of its overall holdings. The total value of its investments in Singapore now exceeds those in China, where markets continue to be hit by severe lockdowns.
But Temasek said it was still committed to investing in the Chinese market.
Chief investment officer Rohit Sipahimalani told a briefing that “most of the regulatory headwinds are behind us” and that a Chinese government campaign targeting the country’s largest tech companies that had wiped billions off the stock market was “nothing new”.
“Around the world, they are concerned about the power of big tech companies, they are concerned about data issues. It’s just the pace of change that we saw in China was faster than what anyone expected,” Sipahimalani said.
Temasek, whose funds are largely sourced from the return on its own investments, continued to increase its holdings over the year, making a net investment of S$24bn.
It made new investments in the crypto industry, including popular exchange FTX, despite Singapore officials recently indicating they would harden their stance on the sector following a crypto market crash.
Blockchain is “going to touch lots of different parts of business”, said Martin Fichtner, Temasek’s deputy head of technology and consumer investments. “Our exposure to cryptocurrencies is minimal . . . We are focused on, more broadly, the applications of the technology and the opportunities that are going to emerge from that.”
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